May 10, 2004

A recent online research initiative, conducted jointly by The Kelsey Group and ConStat, Inc., among online small-business advertisers, suggests clear differences in the way this segment allocates its advertising and media budgets compared with more established small businesses.

The research indicates that small businesses that have been in operation for over 20 years are statistically much more likely to rely on traditional local media such as print Yellow Pages (78 percent of those surveyed). At the same time, newer businesses-in operation less than 10 years-are more likely to use emerging digital local media including Internet Yellow Pages, e-mail marketing, search engine optimization and pay-per-click advertising (only 52 percent of those surveyed are using print Yellow Pages).

Those businesses in operation less than 10 years have considerably smaller advertising budgets ($4,753 on average) as compared to businesses older than 20 years, which spend on average over $9,300 per year. This parallels the self-reported estimates of annual revenues with the newer companies averaging over $765,000 in annual revenues, while the older established businesses average over $2.8M in annual revenues.

"What is interesting is that the newer businesses are spending twice as much on advertising as compared to the older businesses relative to their annual sales volume," said Neal Polachek, senior vice president of The Kelsey Group. "This tells us that the newer businesses should be drawn to advertising and marketing solutions that can clearly demonstrate positive returns on investment."

The data for this research was collected in mid-May through an online survey of 289 online advertising decision makers in small businesses. Any interpretation of survey results should be seen as directional and not reflective of the current behavior of the U.S. small-business population as a whole.

This online survey will be among several research initiatives highlighted during The Kelsey Group's Directory Driven Commerce conference (DDC2004), taking place July 21-23 at the Omni Hotel at CNN Center, in Atlanta, Georgia.

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